Buying a Home
Remortgaging
Landlord
Specialist
Secured Loans
Debt Consolidation
Conveyancing
Finding a Solicitor
Debt Consolidation
Folding credit cards, personal loans, and other unsecured debts into your mortgage can replace several repayments with one - but it turns short-term debt into a long-term cost secured against your home. Here's how it works, what it costs, and when it makes sense.
A debt consolidation remortgage is when you remortgage your home for more than you currently owe, and use the extra amount released to pay off unsecured debts such as credit cards, personal loans, car finance, store cards, or overdrafts.
This can lower your combined monthly outgoings, since mortgage rates are usually lower than credit card or personal loan rates and the repayment term is much longer. But a lower monthly cost isn't the same as a lower total cost - spreading debt over a 20-25 year mortgage term instead of a 3-5 year loan term often means paying more in interest overall, even at a lower rate.
Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. Think carefully before securing other debts against your home.
A remortgage to consolidate debt replaces several separate repayments - credit cards, personal loans, car finance, store cards, overdrafts - with a single monthly mortgage payment. You do this by remortgaging your home for more than you currently owe, releasing the difference as cash, and using that cash to clear your existing unsecured debts.
It's a form of secured borrowing, and that's the key thing to understand before going any further: debts that were previously unsecured become tied to your home. For a broader look at how this fits alongside other secured borrowing routes, see our debt consolidation mortgage hub guide.
Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
A remortgage for debt consolidation follows broadly the same process as any other remortgage, with one extra step: working out exactly how much you need to release to clear your target debts. This works in a similar way to any other method to release equity from your home, but here the released funds go directly towards clearing debts rather than another purpose.
How it works
Work out your available equity
Your equity is your property's current value minus your outstanding mortgage balance. This sets the ceiling on how much you could potentially release.
Get a Decision in Principle
A Decision in Principle from a lender gives you an early indication of what you could borrow, based on your income, credit profile, and the debts you want to consolidate.
The lender assesses your full debt picture
Underwriters look at your total borrowing, not just the mortgage, to check the new payment is affordable, including the debts you're planning to clear.
Your new mortgage completes
The new mortgage pays off your existing one, and the surplus funds are released. Some lenders pay your creditors directly rather than releasing cash to you.
Clear your target debts
Use the released funds to pay off the debts you planned to consolidate, and close those credit accounts so you're not tempted to use them again.
Working out what it will actually cost you to consolidate debt UK-wide starts with separating two different questions: what happens to your monthly outgoings, and what happens to the total amount you'll repay over the life of the mortgage. Most guides only answer the first one.
This is the trade-off at the heart of a debt consolidation remortgage: it can ease monthly pressure while increasing what you pay in total. A credit card balance repaid over 3-5 years usually costs less in total interest than the same amount spread across a 20-25 year mortgage term, even though the mortgage rate is typically lower than a credit card rate. Ask an advisor to compare the total cost of both routes before deciding, not just the monthly figure.
Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Whether remortgaging to consolidate debt is worth it depends on your total debt picture, how long you've got left on any current fixed deal, and whether you're confident you won't rebuild the same debts again. Here's a balanced look at both sides.
Lender criteria for a debt consolidation remortgage sit close to standard remortgage criteria, with a few extra checks because of the debts you're clearing. Because this type of advice involves moving unsecured debt onto a mortgage, it's regulated by the Financial Conduct Authority - you can check any firm's authorisation on the Financial Conduct Authority register. If your credit history is affected by missed payments, defaults, or a CCJ, mainstream lenders may decline your application, but that doesn't mean remortgaging isn't possible - see our guide to remortgaging with bad credit for the specialist options available.
Eligibility
Expert help
Every case is different. An advisor can look at your total debts, your current mortgage deal, and your equity to tell you honestly whether consolidating makes sense for you.
If you're thinking about a remortgage to consolidate debt but you're still part-way through a fixed-rate deal, you'll likely face an early repayment charge (ERC) for leaving early. An ERC is a fee your current lender charges for exiting a fixed or discounted deal before the end of its term, typically calculated as a percentage of your outstanding mortgage balance.
Whether it's worth paying an ERC to consolidate now comes down to a simple break-even comparison: if what you'd save each month by consolidating, multiplied by the number of months left on your current fixed deal, comes to more than the ERC itself, exiting early can still work out ahead. If it doesn't, it's usually worth waiting until your current deal ends.
Some lenders will also let you take a further advance on your existing mortgage without triggering an ERC on the original balance - effectively borrowing more from your current lender rather than remortgaging in full. This is worth asking your advisor about before assuming you need to remortgage completely.
The break-even sum is often more forgiving than people expect, but it only works in your favour if you're confident about how long you'll keep the new mortgage. If you're likely to move house or remortgage again within a year or two, the ERC may never be recovered. Run the numbers with an advisor before deciding to break your current deal early.
A debt consolidation remortgage isn't the only route, and it isn't automatically the right one. Before deciding, it's worth understanding how it compares with other ways of dealing with unsecured debt.
For more detail on second charge lending, see our guide to secured loans for debt consolidation. If you're struggling to meet minimum payments rather than simply looking to simplify them, debt advice from Citizens Advice or MoneyHelper (0800 138 7777) can help you understand all of your options, including a debt management plan or, in more serious cases, an IVA.
Alternatives
Second charge secured loan
A separate loan secured against your home alongside your existing mortgage, rather than replacing it. Often used by homeowners who are mid-fix and want to avoid an early repayment charge on their main mortgage, though your home is still at risk if repayments aren't kept up.
Balance transfer credit card
Moving card balances to a new card with a promotional interest-free period can work well for smaller debts and borrowers with a good credit score, without putting your home at risk. It relies on clearing the balance, or securing another transfer, before the promotional period ends.
Personal debt consolidation loan
An unsecured loan used to pay off multiple debts, leaving one fixed monthly repayment. It doesn't put your home at risk, but approval and terms depend on your credit score, and loan amounts are typically capped lower than a secured route.
Debt management plan
An arrangement, often set up through a free service, that consolidates payments to creditors without new borrowing. Suited to homeowners struggling to meet minimum payments rather than those simply looking to simplify repayments.
Waiting and reviewing later
If you're close to the end of a fixed deal, or your debts are manageable as they are, waiting and reviewing your options at the right time can be the lowest-cost path. Speak to an advisor to work out what the right time looks like for you.
We compare a wide range of lenders to find options that fit your total debt picture.
Every guide on this topic mentions the risk of running up new debt after consolidating - it's rarely followed by anything practical. If you're going ahead with a remortgage to consolidate debt, these three habits make the biggest difference.
After you consolidate
Common questions
It's possible, though your options will usually come from specialist rather than mainstream lenders. Missed payments, defaults, or a CCJ don't automatically rule you out, but they do reduce the number of lenders willing to help and may mean a lower maximum loan-to-value. Speak to an advisor who can assess your credit file against current lender criteria - see our guide to remortgaging with bad credit for more detail.
Applying for any new borrowing, including a remortgage, involves a credit check that can cause a small, temporary dip in your credit score. Over time, consolidating can actually help your score if it stops you missing payments on multiple accounts and reduces your overall credit utilisation. The impact depends on your existing credit history and how you manage the mortgage afterwards.
Timelines vary, but a debt consolidation remortgage typically takes 4 to 8 weeks from application to completion, depending on the lender, the valuation, and how quickly your documents are provided. A further advance from your existing lender can sometimes be quicker, while a second charge mortgage or a case with adverse credit may take longer.
It's possible in principle, but far fewer lenders offer this on buy-to-let mortgages than on residential ones, and the rules around using released equity can be stricter. Some lenders restrict what released funds can be used for on a buy-to-let remortgage. Speak to an advisor who specialises in buy-to-let lending to understand your options.
Most lenders want you to retain at least 10-15% equity in your property after consolidating, meaning a maximum loan-to-value of around 85-90%. The exact amount will depend on the lender, your credit profile, and how much you need to release. Speak to an advisor to work out how much equity you have and what that means for your options.
What our clients say
Shortly after I spoke with Anna, she was also very helpful and made it effortless and a nice experience.
Had a really good experience regarding arranging a secured loan. They introduced me to a great advisor. Thanks for the help.
For once a loan transaction without stress and complications. Very impressed and highly recommended.
Thrilled to share my exceptional experience with Money Saving Advisors. The website made it incredibly simple and easy to connect with an advisor. They helped me find the best deal on my remortgage and secured a very competitive interest rate!
Great advice and money saved on mortgage.
I have previously declined a loan of the value I needed from various brokers, but this website found me a reputable broker with surprisingly decent rates.
Remortgage
Our remortgage specialists compare deals from a wide range of lenders to help you save money.
